Fresh Off Border Spat, China Woos India

Fresh off a three-week standoff over their disputed border, the Line of Actual Control (LAC), China and India are taking steps to repair their relationship and possibly set it on a more stable long-term trajectory.

Although the standoff ended with the withdrawal of troops from the border on May 6, and Indian External Minister Salman Khurshid’s subsequent visit to China last week, recent overtures from both sides, but especially from Beijing, suggest a desire to quickly repair the damage done to the bilateral relationship.

Ahead of his trip to India next week, China’s Premier Li Keqiang told a visiting Indian youth delegation on Wednesday that India and China "must shake hands" to make Asia an "engine of the world economy.”

“Many people in the world believe that in the 21st century, the Asia-Pacific, Asia in particular will play a more important role in global economy and politics and that Asia will become an important engine for the world economy,” Li said, adding: “For this vision to truly come true, our two countries must shake hands and conduct exchanges so that together we can raise the standing of Asia in the world and truly make Asian economy an important engine for the world economy.”

Li’s remarks followed similar ones made by Qin Gang, the Director-General of the Chinese Foreign Ministry’s Information Department. In a trip to India on Monday, Qin assured his Indian hosts that Beijing viewed the recent border incident as an “isolated” incident that should not be allowed to affect broader bilateral relations. Qin also praised the two sides’ use of the joint border dispute resolution mechanism to ensure the standoff remained a “local” issue that didn’t spill over into other issues.

Most notably, Qin stressed that one lesson China was taking away from the recent standoff is the urgent need to agree to a final settlement on the border.

“We need to redouble our efforts to push forward the framework for negotiations so that we can reach a fair, reasonable and mutually acceptable solution at an early date,” Qin said, Indian media outlets reported.

Following closely on the heels of Qin’s visit, which was mainly to prepare for Premier Li’s trip to India from May 19-21, Chinese and Indian military officials held their own talks on Wednesday at the Multipurpose Complex of Chinese Army (PLA) on the Chinese side of the border.

Although these are all positive signs for the short-term, it’s not at all certain that any actual progress on resolving the border issue will follow. Talking about the need to solve the border issue has never been the problem—agreeing on issues has been. After all, the two sides have held 15 rounds of talks on the border question over the years, and are still stuck on the second of a three-phase approach for reaching a final agreement. Notably, each step in the process gets progressively more detailed and so more difficult to come to terms on.

Still, there are strong and growing economic incentives to reach an agreement. The two sides have seen their bilateral trade metastasize in recent years, rising from US$3 billion in 2000 to US$80 billion today. With China already India’s largest trading partner, the two sides aim to increase annual trade volumes to US$100 billion by 2015. Leaders in Beijing are also putting increasing importance on China's trade with India, as evident by Li’s decision to make India the destination for his first visit abroad in his new position.

Yet, the bilateral exchange still heavily favors China, with India running a US$20 billion trade deficit with Beijing in 2011. Like the border standoff, this is cause for concern among certain quarters in New Delhi.